Key Data for the Week
Key economic data released this week:
Australian shares improved just enough to recoup Monday’s losses, with the ASX 200 index lifting by 0.68%, thanks to improvement in almost all sectors. This was despite a weak lead from Wall Street. The big picture has yet to change however, with markets remaining volatile for a number of months in the absence of a meaningful catalyst, and ahead of the August reporting season. The Australian dollar gained against most major currencies.
The Supreme Court of NSW has given the green light for a class action against failed electronics chain Dick Smith. Last year, the company closed more than 300 retail stores following lower profits, sluggish sales and losing the backing of its lenders. More than 2000 people lost their jobs when administrators were unable to find a suitable buyer.
The Australian futures market points to a 0.74% rise today, being driven by strong leads from US share markets overnight.
A series of corporate earnings announcements pulled US stocks to fresh record highs overnight, while treasuries tumbled the most in a month, as the Federal Reserve began its two day monetary policy meeting.
Markets took a ‘risk-on’ tone, as generally positive earnings and economic data bolstered confidence in the strength of the global economy. The data comes as the Fed weighs robust global growth against feeble inflation and mixed US economic data. Expectations are for policy makers to keep rates on hold.
Earnings from Caterpillar and McDonald’s led to solid gains in the Dow Jones, while Alphabet’s disappointing results weighed on Technology stocks.
Banks advanced as sovereign debt yields rose, while a rally in copper supported miners. Saudi Arabia’s promise to further cut crude exports spurred the biggest rally in oil since November.
The Dow Jones closed up 100 points, or 0.5%, and the S&P 500 index finished up 7 points, or 0.3%.
European share markets finished higher, buoyed by strong business confidence data from Germany, which beat expectations.
It could be a sign of broadening European recovery, or just desperation from yield hungry investors, but Greece has successfully raised 3 billion Euros via a government bond issuance.
At a yield of 4.625% it’s obviously an attractive source of income, particularly given S&P Global Ratings raised Greece’s credit rating outlook from stable to positive last Friday, even though it’s still sub investment grade.
The level of interest in the new bond is also a sign things have definitely improved for Greece and vindicates the bailout program Europe implemented a few years back. The bond is reported to have attracted 200 offers valued at 6.5 billion Euros, and is the first step in Greece’s bailout exit strategy which ends in August 2018.
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